South Korea plans to implement "super strict AML" measures to combat small amount loopholes: for amounts below $680, exchanges are required to collect personal data for KYC.

South Korea will implement the strictest anti-money laundering regulations for cryptocurrencies in history, expand the Travel Rule to transactions below $680, and close regulatory loopholes for small transactions. The new rules also include blocking high-risk offshore exchanges, restricting criminals from becoming VASP shareholders, and introducing a preventive account freezing mechanism, which is expected to be implemented in the first half of 2026. (Summary: South Korea's “large-scale token removal” rumors continue, what impact will the upcoming Virtual Asset User Protection Law have?) (Background supplement: South Korea plans to ban credit card “deposit into overseas exchanges” to prevent cross-border money laundering and further escalation) South Korea is preparing to implement one of the strictest cryptocurrency anti-money laundering (AML) regulations in its history. The government plans to expand the “Travel Rule” to transactions under 1 million won (about $680) and close regulatory loopholes that used to allow users to split large transfers into small transactions to circumvent identity verification, Lee Won, chairman of the Financial Services Commission (FSC), announced on November 27 on the National Assembly Legislative Committee. This means that even for small cryptocurrency transfers, exchanges must collect and share sender and receiver identity information, with significant implications for all Korean crypto users. Travel Rule Full Coverage: No Exemption for Transactions Under $680 According to FSC Chairman Li Yuanyuan, the change will close a long-standing loophole that in the past users could split large transfers into multiple small transactions to circumvent the exchange's identity verification requirements. Travel Rule is an international anti-money laundering standard proposed by the Financial Action Task Force (FATF) that requires virtual asset service providers (VASPs) to collect and share sender and receiver identity information when making cryptocurrency transfers. After the implementation of the new regulations, Korean exchanges must fully implement this requirement even for small transactions under $680. We will crack down on cryptocurrency money laundering and expand the Travel Rule to transactions under KRW 1 million. Multi-pronged approach: blocking offshore exchanges, restricting shareholder qualifications According to the FSC, the new rules aim to prevent cryptocurrency tracks from being used for tax evasion, drug dealings and other overseas payments for money laundering. In addition to expanding the Travel Rule, the government will implement the following measures: Block high-risk offshore exchanges: Prohibit “high-risk” offshore trading platforms from interacting with South Korean users, which are considered to have a high risk of money laundering. Enhanced VASP registration reviews: Exchanges will face stricter financial health reviews and expanded registration standards for virtual asset service providers. Shareholder Eligibility Restrictions: The government will prohibit individuals with drug or tax criminal records from becoming major shareholders of VASP, preventing malicious actors from taking control of licensed companies. Preventive account freezing: The Financial Intelligence Unit (FIU) will introduce a preventive account freezing mechanism, which, in the case of serious crimes, can freeze funds during investigations to prevent the transfer of assets. Implementation in the first half of 2026: New milestones in AML regulation in South Korea Officials plan to finalize the new framework in the first half of 2026 and submit legislative amendments to the National Assembly. At the same time, South Korea will expand cooperation with global institutions such as the Financial Action Task Force (FATF). This reform represents Korea's most comprehensive AML regulatory enhancement since the Special Financial Information Act was updated in 2021. Fighting Crime and Protecting Privacy: A Double Edge of Enhanced Regulation On the positive side, these measures help combat illegal activities using cryptocurrencies, increase transparency in the financial system, and protect investors from fraud and money laundering risks. For compliant exchanges and VASP operators, a stricter regulatory environment may provide a competitive advantage, as non-compliant operators will be eliminated, which will benefit the healthy development of the industry in the long run. In addition, cooperation with international organizations such as the FATF will also help South Korea exert influence in the development of global crypto regulatory standards. However, the new rules also raise some doubts. Privacy concerns come first – even small transactions under $680 require identity verification, potentially raising concerns about personal data protection. The cost of compliance will also increase significantly, and exchanges will need to invest more resources in setting up identity verification systems, and these costs may eventually be passed on to users. In addition, overly strict regulation may drive some users to switch to decentralized finance (DeFi) or peer-to-peer (P2P) transactions, which in turn will make regulation more difficult. It is worth noting that South Korea has also taken a tough stance on tax audits. In October, National Inland Revenue Service (NTS) officials said the agency was prepared to conduct residential searches and confiscate cold wallets and hard drives if owners were suspected of hiding crypto assets offline to evade taxes. This shows the South Korean government's zero-tolerance attitude towards crypto crime and tax evasion. Conclusion The AML reform in South Korea marks the further strengthening of the global crypto regulatory trend. South Korea has continued to tighten its regulatory environment since the 2021 update of the Special Financial Information Act, and this extension of the Travel Rule to microtransactions closes the last important regulatory loophole. For crypto users, this means that privacy and convenience will be further limited, but it may also lead to a safer and more transparent trading environment. For VASP operators, although the cost of compliance has increased, in the long run, a healthy regulatory environment is conducive to the sustainable development of the industry. As countries around the world strengthen AML regulation, compliance has become an inevitable trend in the crypto industry. Risk Warning: Changes in the regulatory environment may affect the convenience and privacy of cryptocurrency transactions. Increased compliance costs may lead to higher fees. Users should pay attention to changes in local regulations and assess the impact on their trading habits. Related reports South Korea Extends Cryptocurrency Tax by Two Years to 2027, Investors and Industry Welcome Buffer Period FATF Travel Rule on the Road: How Does the Cryptocurrency Grey Market Respond to New Identity Verification Rules? Do Kwon has been extradited to the United States! Terra's founder faces allegations of securities fraud “South Korea plans to implement “ultra-strict anti-money laundering” to crack down on small vulnerabilities: the amount is less than 680 US dollars, and the transaction requires KYC to collect personal information” This article was first published in BlockTempo's “Dynamic Trend - The Most Influential Blockchain News Media”.